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Economic impacts of climate change on the Australian dairy sector

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  • Hanslow, Kevin
  • Gunasekera, Don
  • Cullen, Brendan
  • Newth, David

Abstract

We analyse the economic implications of climate-driven pressures on the pasturebased dairy sector in Australia. We use an integrated assessment model that includes a climate scenario generator, a climate-biophysical response framework and an economywide analytical framework. For the climate scenario generator, we use data from the OzClim database of the Commonwealth Scientific and Industrial Research Organisation. For the climate-biophysical response framework, we use the DairyMod model with inputs of changes in climate variables from OzClim to quantify climate change effects on pasture growth and productivity. For the economywide analytical framework, we use the National Integrated Assessment Model to quantify the economic implications of these effects on the dairy sector. The simulated pattern of regional changes in dairy output is not a simple function of the changes in dairy productivity. Our results show that the relative size of productivity changes across regions affects the relative competitive advantage of dairy-producing regions. Several factors affect the regional distribution of simulated dairy-output changes, including substitution among sources of dairy output and competition for inputs like supplementary feed. An increased output in regions with moderate reductions in dairy productivity may occur because the severely climate-affected regions absorb the greatest loss in output.

Suggested Citation

  • Hanslow, Kevin & Gunasekera, Don & Cullen, Brendan & Newth, David, 2014. "Economic impacts of climate change on the Australian dairy sector," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 58(1), January.
    • Handle: RePEc:ags:aareaj:260070
    DOI: 10.22004/ag.econ.260070
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    1. Ozkan, Seyda & Farquharson, Robert J. & Hill, Julian & Malcolm, Bill, 2012. "Effect of a carbon price on farm profitability on rain-fed dairy farms in south-west Victoria: a first look," AFBM Journal, Australasian Farm Business Management Network, vol. 9(1), pages 1-8.
    2. Kevin Hanslow, 2010. "NIAM: National Integrated Assessment Model - Proof-of-concept development and application," Centre of Policy Studies/IMPACT Centre Working Papers g-210, Victoria University, Centre of Policy Studies/IMPACT Centre.
    3. Garnaut,Ross, 2008. "The Garnaut Climate Change Review," Cambridge Books, Cambridge University Press, number 9780521744447.
    4. -, 2009. "The economics of climate change," Sede Subregional de la CEPAL para el Caribe (Estudios e Investigaciones) 38679, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    5. Philip Adams & Janine Dixon & James Giesecke & Mark Horridge, 2010. "MMRF: Monash Multi-Regional Forecasting Model: A Dynamic Multi-Regional Model of the Australian Economy," Centre of Policy Studies/IMPACT Centre Working Papers g-223, Victoria University, Centre of Policy Studies/IMPACT Centre.
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    Cited by:

    1. Bell, Kendon, 2017. "Empirical estimation of the impact of weather on dairy production," 2017 Conference, October 19-20, Rotorua, New Zealand 269521, New Zealand Agricultural and Resource Economics Society.
    2. Sheng, Yu & Xu, Xinpeng, 2019. "The productivity impact of climate change: Evidence from Australia's Millennium drought," Economic Modelling, Elsevier, vol. 76(C), pages 182-191.
    3. Gökçe Koç & Ayşe Uzmay, 2022. "Determinants of dairy farmers’ likelihood of climate change adaptation in the Thrace Region of Turkey," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 24(8), pages 9907-9928, August.
    4. Lieffering, Mark & Newton, Paul C.D. & Vibart, Ronaldo & Li, Frank Y., 2016. "Exploring climate change impacts and adaptations of extensive pastoral agriculture systems by combining biophysical simulation and farm system models," Agricultural Systems, Elsevier, vol. 144(C), pages 77-86.
    5. Cai, Yiyong & Newth, David & Finnigan, John & Gunasekera, Don, 2015. "A hybrid energy-economy model for global integrated assessment of climate change, carbon mitigation and energy transformation," Applied Energy, Elsevier, vol. 148(C), pages 381-395.

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